The pros and cons of leasing or buying a car
When shopping for a new car, you should do yourself a favor and consider the pros and cons of leasing or buying. That’s because while buying is the more popular method, leasing might be right for you. Purchasing a car is not a one-size-fits-all situation. Here are some things to consider about leasing vs buying a car.
Pros and Cons of Leasing a Car
- Low Monthly Costs. Lease payments are generally lower than the payments made on a new car loan.
- New Cars. When your lease is up, you can return your car and get a new one.
- Maintenance Costs. Most leases are only a few years old, which means the maintenance costs are typically covered.
- Lack of Control. Leases come with mileage restrictions and other guidelines that can make them frustrating. You don’t own the car, so you never have complete control over it.
- Fees. Leases come with fees for a variety of things, like excess mileage and modifications to the car.
- Locked In. If you want to cancel the lease, you’ll get hit with an early termination charge that can be quite hefty.
Pros and Cons of Buying a Car
- Complete Control. You own the car, so you can do whatever you want with it.
- Overall Costs. Studies have found that the overall costs of owning a car are generally cheaper than leasing several cars for the same amount of time.
- Deductions. If you use your vehicle for business and personal, you can deduct some of the depreciation costs.
- Deprecation. Your car will lose value quickly. Some estimates put a new car’s value going down by up to 25 percent in the first five years.
- Other Costs.Driving costs add up quickly, from gas to repairs to insurance fees.
Do One Thing: In the market for a new car? Learn the pros and cons of leasing and buying and then pick the strategy that best fits your budget and habits. If buying is right for you, visit our Auto Loans page to learn more about the options offered by Life.
Original article by Chris O’Shea and adapted in partnership with SavvyMoney.